Q1 2021 Altisource Portfolio Solutions SA Earnings Call

May 10, 2021

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Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

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Ladies and gentlemen, and thank you for standing by and welcome to other source fourth quarter 2021 earnings call. At this time all participant lines are on a listen only mode.

After the Speakers' presentation there'll be a question and answer session to ask a question too on the session you will need to press Star then one of your telephone. Please be advised that today's conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like to hand, the conference over to your host Michelle estimate Chief Financial Officer.

Please go ahead.

Thank you operator, we first want to remind you that the earnings release and form 10-Q, and quarterly slides are available on our website at www Dot <unk> Dot com.

These provide additional information investors may find useful and.

Our remarks today include forward looking statements, which involve a number of risks and uncertainties that could cause actual results to differ.

In addition to the usual uncertainty associated with forward looking statements. The current COVID-19 pandemic makes it extremely difficult to predict the future state of the economy and its potential impact on healthy source.

Please review the forward looking statements section sections, and the company's earnings release and quarterly slides as well as the risk factors contained in our 2020 form 10-K, which describe factors that may lead to different results. We undertake no obligation to update these statements as a result of new information or future events.

During this call we will present, both GAAP and non-GAAP financial measures and our earnings release and quarterly slides.

You will find additional disclosures regarding the non-GAAP measures a reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides go.

Joining me from today's call is Bill Chaperone, our chairman and Chief Executive Officer, I will now turn the call over to Bill.

Thank you Michele good morning, and thank you for joining today's call. This morning, I will discuss the progress, we're making and our core origination and default businesses described the terms of our recently announced agreement with Ocwen and provide a brief overview of our first quarter financial performance.

Turning to slide three and our origination business, we're pleased where the first quarter performance and more importantly, with our long term prospects, we generated $16 $8 million and revenue, which represents 68% growth compared to the first quarter of 2020.

This growth reflects sales wins greater market penetration with our existing solutions the rollout of a new employment reseller solution and our strong origination mark.

For the full year, we believe we are on track to grow revenue and this business by approximately 40 to 50 per cent compared to 2020 significantly outpacing the mba's forecast for a 14% decline and origination volume.

Growth and our origination business further diversifies our revenue is almost all of our 2021 and forecasted origination revenue is from customers other than Ocwen, and and RSV and no one customer represents more than 11% of first quarter revenue.

The next couple of slides to provide you with an overview of our origination business business model and growth strategy.

Turning to slide four alpha sources, the manager of the 226 member lenders, one mortgage cooperative and.

As the manager we offer a suite of solutions designed to help the members improved their profitability and compete against larger and better capitalized mortgage companies.

We also provide the members with ongoing educational programs and access to round table events and conferences, where the members can interact with other likeminded executives to discuss best practices and other issues impacting the industry.

We estimate that the lenders one members collectively originated approximately 16% of residential mortgages and 2020.

Representing approximately $610 billion and origination volume.

To give you a better sense of the member scale. If you aggregate all of the members origination production lenders one would be the largest residential mortgage lender and roughly the same size as the top three lenders combined.

The growth and market share of the lenders one members is impressive.

Upon the typical lenders one members branch office business model the members originate a greater proportion of purchase mortgages and the large nationwide lenders, whose production is more heavily weighted to refi.

It is anticipated that purchase mortgage originations will become a greater proportion of total originations and the next several years benefiting lenders one members.

And 2020, we grew revenue and our origination business by 46% and anticipate growing by approximately 40% to 50% and 2021.

We believe that the medium to longer term opportunity for origination businesses massive with a forecasted year end 2021 lenders one membership base, representing a serviceable market of $5 7 billion.

Slide five illustrates our business model as the manager of the cooperative our objective is to leverage the collecting the collective buying power of the members to improve their profitability and generate revenue for alpha source, primarily through four revenue streams and <unk>.

First we negotiate better pricing for the members with preferred capital market providers, and vendors and participate and enhanced capital market execution and vendor savings.

Second, we resell certain products, including floods certificates equal.

E closings and verifications at attractive pricing to the members.

Third we established programs to potentially earn performance based equity and certain providers that offer products to the members that attractive pricing.

And finally alpha sources of direct provider of solutions, including title insurance, and escrow valuation and fulfillment services and vendor oversight technology.

Slide six sets forth our growth strategy for our origination business. We believe there is a massive opportunity to continue to grow by adding more lenders one members increasing the capture rate of existing solutions launching more solutions and evolving to a higher margin reseller or direct provider for certain solutions.

And <unk>.

We believe that our growth strategy creates a very attractive network effect, we are adding more lenders one members and evolving certain offerings through a reseller of direct provider affords us greater scale and bargaining power and improves the members profitability, which in turn attracts more members.

As an example, the value we bring to the lenders one members last week, we signed an agreement with one of the nation's largest retailers to establish a regional pilot program to lease space at its stores Tau for loan origination and related services to the retailers customers to our lenders one members.

We're in active dialogue with our lenders one members to manage these stores and help them generate mortgage leads and close more loans, which we anticipate would help participating members to further extend their successful branch office business model.

In addition to providing what we believe will be attractive mortgage leads to the lenders. One members. We anticipate that this program will enhance customer loyalty for the retailer and generate attractive revenue and earnings for Alpha source.

If the 10 to 20 store pilot program is successful the retailer has indicated that it would like to work with us to expand the program nationwide to as many stores for which we have an appetite.

We hope to launch the pilot program by the end of the third quarter.

We're excited about the opportunity for origination business and believe we are just getting started with our origination businesses unique distribution engine and strong growth prospects. We believe this business will be a significant catalyst to create value for shareholders. We look forward to continuing to update you on our progress.

Turning to slide seven and our default business last week, we entered into an agreement with Ocwen to extend the term of our services agreement from August 2025 to August 30.

Expand the scope of solutions to include the opportunity to provide field services first and second chance foreclosure auctions and title services on Ocwen, FHA, VA and USDA loans and.

And establish a framework to provide foreclosure trustee solutions and additional states.

And as an important and strategic customer and we were pleased to enter into this agreement.

We also believe that Ocwen has recent capital raise servicing portfolio growth and anticipated launch of its MSR vehicle will provide <unk> with significant opportunity to grow as ocwen gross.

As expected first quarter 2021 revenue and our countercyclical default business was 70% lower than the first quarter of 2020, and 27% lower than last quarter.

This was driven by the temporary pandemic related government measures and other limitations on loan servicers as well as the transition of field services title and valuation referrals related to one of Ocwen MSR investors to that investors captive vendors and the second half of 2020.

According to Black Knight foreclosure starts and active foreclosure inventory, we're at record lows and February is extended foreclosure moratoriums continue to suppress default activity.

At the same time average seriously delinquent loans and the first quarter were four 1% compared to one 2% and the first quarter of 2020.

We continue to be optimistic that the medium to longer term prospects for this business are strong as we shared with you on our last call and as shown on slide eight we estimate that revenue and our default business could grow on a stabilized basis to between 243 and $397 million representing $120.

260% growth compared to the midpoint of our 2021 revenue scenarios.

At the low end and our forecast assumes a return to the historically low delinquency rates prior to the pandemic at the high and the forecast assumed delinquency rates are at the higher December 2020 levels.

We anticipate that the default market will stabilize in 2023, when post moratorium foreclosure starts convert to a steady state of foreclosure and Oreo inflows and sales.

With short term demand for our default services constrained due to the pandemic related foreclosure moratoriums and forbearance plans and the expectation that additional restrictions on Servicers may largely prohibits foreclosures to commence until the end of the year, we are leveraging our default offerings to support the single family Investor market.

To support real estate investors, we are developing our signature buyer and signature seller programs to provide a suite of solutions to single family investors.

As you can see on slide nine the single family Investor market is much larger than the foreclosure sale market with an estimated 1 million investment homes sold per year compared to 140000, and foreclosures that became our REO and 2019.

In addition, the participants and the single family market you similar offerings to what we provide and the default space.

These include real estate brokerage online real estate home sales and auctions title and escrow services home and rental valuation and investment home underwriting and acquisition services.

We believe alpha sources, one of the few one stop shop providers of these services on a nationwide basis.

To address the single family rental market, we are enhancing our hubs and dot com and equator dot com websites to better support real estate investors. We're also establishing channel programs intended to drive single family investors to our suite of services to support the acquisition management and disposition of investment homes, while we are still early.

And our development of these programs, we believe that could become a significant contributor and provide greater balance to our real estate business over the entire business cycle.

Turning to our first quarter financial performance as you can see on slide 10, we generated $48 $1 million of service revenue and negative $8 $5 million of adjusted EBITDA.

And we performed largely in line with our expectations for the quarter as discussed our origination business performed well with revenue growth of 68% compared to compared to the same quarter last year.

The default business was impacted by the continuing pandemic and the loss of referrals from certain portfolio sub serviced by Ocwen and the second half of 2020.

To address the extensions of the foreclosure moratoriums and forbearance plans, we took additional steps designed to reduce our costs and late February.

As a result of these and other measures we anticipate that 2021 cash operating costs, excluding outside fees and services should be more than $20 million lower and first quarter annualized costs.

This equates to an average of more than $7 million and lower costs for the remaining three quarters of 2021.

For additional information on our first quarter financial performance. Please refer to the press release and form 10-Q issued earlier this morning.

We believe we are positioning <unk> as a more diversified company that should return to growth and 2022, our origination businesses demonstrating significant growth with a massive potential runway in front of it our default business continues to be temporarily impacted by the pandemic, but we believe it has tremendous upside from the anticipated <unk>.

And up demand once delinquent loans begin to move through the normal default lifecycle.

And finally, our expansion into the single family Investor market allows us to leverage our existing suite of default services and should further diversify our revenue and earnings streams on.

Now I'll open up the call for questions operator.

Thank you as a reminder to ask a question you will need to press Star then one on your telephone.

And Joel Your question. Please press the pound key.

Our first question comes from the line of Mike Grondahl with Northland capital markets.

Your line is open.

Hi, This is Michael on for Mike. Thanks for taking the questions. Maybe just first on the Ocwen deal on.

It seemed like a nice sort of solutions expansion overall.

Delete any solutions and your state there.

And just overall net positive there.

Yeah, Hey, Mike Good morning.

The agreement with Ocwen and actually we view as a very positive we're adding five years term and we're adding a slew of FHA related services that we werent previously providing to ocwen.

Pre pandemic those.

Services were generating I think roughly $2 million a month of service revenue.

Our revenue today, obviously with the pandemic they are down significantly from there we just launched.

Some of these services with Ocwen, a couple of months ago, and we anticipate growing those.

Significantly over the next over the coming months.

But basically we've added five years to our term, which certainly increases the present value of other value of our relationship with Ocwen.

Got it and.

And then just since the end of the first quarter last few weeks here.

I think and I knew there was a federal judge on the.

The addiction.

Good morning thorium.

And anything new there as far as on that.

And at that and.

At the other business.

Sure. So I think there was a DC circuit court that.

The rule of the CDC eviction moratorium was unconstitutional.

That ruling did not address the foreclosure moratoriums.

There are different opinions amongst the circuit courts with respected eviction moratoriums and it looks like it's going to go up on appeal, we're working at Alta source on on an assumption that the moratoriums and at the end of June but that there'll be other measures put in place by the government that essentially.

And are effectively.

Prevent foreclosures from being started until the end of this year, but over those that six month period that loss mitigation work will continue so that going into 2021 that foreclosure process could get back to a more normal operating environment.

Thanks, Bob I'll hop back in the queue.

Great. Thank you.

Thank you. Our next question comes from the line of Shaw Nieto with Nathan and Park. Your line is now open.

Hey, Thanks for taking my question.

Can you just talk about how you see liquidity from the remainder of the year, obviously, if things are starting to pick up on that.

And it is going into the fourth quarter.

And can you just sort of address your and your thoughts around.

Cash share.

And so we ended the quarter with $41 million of.

Cash.

And we continue to implement.

Cash savings activities and the first quarter and into April of this year and that we believe thats going to considerably reduce our EBITDA loss as the year progresses.

Also in the first quarter typically working capital uses cash and in subsequent quarters that generates cash and we are also anticipating.

Pretty sizable tax refund later this year. So we believe we've got adequate liquidity for the year.

That said, we're also evaluating some other opportunities to create a cushion. We believe there is some real opportunity to create shareholder value with our origination business and we're exploring options there and we're also exploring other ways in which we could create liquidity, which is probably a bit premature to talk.

On this call.

Okay.

I guess I would just.

Yes, I would just add to that that we think the impact from the pandemic as short term. Unfortunately, the pandemic and this and investor of Ocwen that move business away is having an impact on us this year, but we believe there is tremendous pent up demand as we discussed in my prepared remarks, and our default business. We've also extended the runway.

And <unk> with Ocwen for an additional five years and are adding additional services that we may provide to.

To Ocwen and then our origination business continues to grow at a very rapid pace and we also believe that has.

A very long runway and finally as we've talked about and my prepared remarks. We're also beginning to leverage those tools. We've developed further default space for our signature seller and signature buyer program.

Support real estate investors and we thank all and all of that will provide for longer term growth and a more balanced customer base for Alta source.

Okay.

Great.

Thank you.

As a reminder to ask a question you will need to press Star then one on your telephone.

Our next question comes from the line of Raj Sharma with B Riley. Your line is now open.

Hello, Good morning, Thanks for taking my question.

On.

<unk> can you touch upon the single family.

Rental.

Opportunity how much.

Does that what does that comprise of your business today and also.

And what is what is different.

And how you're approaching it but also how does the <unk>.

Marketplace and the default services so that differs from the.

The rest of the business on.

On the single credit Haynesville great.

Great Rush and thanks for your question.

Okay.

<unk>.

And the real estate Investor space, where today, we're developing two programs. One is called the signature buyer program and the second is called the signature seller program.

And the signature buyer program.

We have a couple of channels to drive business to that suite of services that we provide and the default space title valuation online auction brokerage et cetera, and so one is there are those.

Investors that have crypto currency, we've created a relationship with a company, where they'll convert that crypto currency to Fiat and so we can help crypto investors buy homes by investment homes using our suite of services. So that's one channel a second channel as we're talking with retail investment advisers, who have custom.

<unk> that are looking to diversify their revenue stream.

Away from just the for example, the stock market and view real estate as another opportunity.

And the private markets to make investments so we're working to establish.

Those channel relationships with retail investment advisors to help their customers buy manage and ultimately sell investment homes and then of course, we're leveraging leads on our website bolt on <unk> dot com and on equator Dot com, where we've deployed youre starting to see some of these improvements to the site, where we've deployed some tool.

<unk> and make it easier for investors to evaluate and under search for evaluate and underwrite on investment homes at a basic level and then we can provide the brokerage services and title services valuation services et cetera.

To those investors. So those are some other channels on the on the signature buyer side.

On the signature seller side, what we're doing Raj is helping investors primarily investors sell their rental homes on both.

<unk> dot com and equator, and I think and the first quarter just to give you a sense of some of the progress we made and we really just getting going we signed 26 signature seller agreements don't hold me to the exact number but I think we generated about 55000 $60000 of revenue and April representing people.

Investors that are selling their homes on hub zone, and so we're looking to significantly expand that program as well and then just to give you to answer your question about.

Why the pivot here.

If you think about we were more on the rental space through our relationship with frankly art residential and then we sold back our property management business to them a couple of years ago, and then ultimately they sold their business and are now private and so we're now at a point, where we're saying look we should revisit these suite of services because it's leveraging.

And almost the exact same set of services that we're providing to loan servicers and other investors on the default side. We can now pivot and also provide those services on the investor side, while while and particularly those default market has slowed down as much as it has so we view this as a as a as a medium to longer term opportunity.

We're making good progress.

Obviously, we're still in the early innings.

Got it.

Got it and then on the off line extension.

I think you mentioned that.

And settlement on.

And all.

Yeah.

Issues with part of the business.

This is for US ahead of schedule can.

Can you give some color around that and this is take care of.

Yours.

And the.

I guess the issue that you had with energy.

And so this is an agreement between the alpha source and Ocwen.

Sure.

We had a disagreement as to whether or not aqua and had the.

Ocwen has the ability to move services that were covered what we believe were covered by our agreement to help resource to Nrg's captive vendor. So this was this settles that disagreement.

By extending the term of our agreement for five years. So from August 25 to now August 32030, and we've also added FHA services and we've now started I think we're getting.

<unk> roughly 20% of Ocwen volume 10, or 20% of Ocwen volume I think we are at 20% beginning in April of their FHA field services work and for new foreclosures their auction work, but keep in mind with the pandemic. The volumes are significantly lower than what they would normally be and then we're working with Ocwen and.

Very.

Thoughtful manner to continue to expand the scope of services, we're providing to them on FHA up to at least 90% of <unk> volume and then we also have the opportunity, which we have not started yet to add an additional five states where we do.

Foreclosure trustee work.

For Ocwen and then there's also some opportunities around <unk>.

Our reverse mortgage portfolio, which we haven't started yet.

Great that's.

That's it thank you I'll get back on the market.

Thanks Raj.

Thank you.

To ask a question. Please press Star then one on your telephone.

There are no further questions I will now turn the call back to Ms. Sheffield for closing remarks.

Great. Thank you operator, and thank you for joining the call. We appreciate your support and interest and Alpha source. Thanks.

Ladies and gentlemen, this concludes today's conference call and we thank you for your participation you may now disconnect.

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Ladies and gentlemen, and thank you for standing by and welcome to Apis on fourth quarter 2021 earnings call at this time, all participant lines on a listen only mode and.

And the speaker's presentation there'll be a question and answer session to ask a question, though on the session you will need to press Star then one of your telephone. Please be advised that today's conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like to hand, the copper so what's your host Michelle <unk> Chief Financial Officer.

Please go ahead.

Thank you operator, we first want to remind you that the earnings release and form 10-Q, and quarterly slides are available on our website at www Dot Aussie stores Dot com.

These provide additional information and investors may find useful our remarks today include forward looking statements, which involve a number of risks and uncertainties that could cause actual results to differ.

In addition to the usual uncertainty associated with forward looking statements and the current COVID-19 pandemic makes it extremely difficult to predict the future state of the economy and its potential impact on healthy choice.

During this call we will present, both GAAP and non-GAAP financial measures and our earnings release and quarterly slides.

You will find additional disclosures regarding the non-GAAP measures a reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

Joining me for today's call is Bill Chaperone, our chairman and Chief Executive Officer, I will now turn the call over to Bill.

Thank you Michele good morning, and thank you for joining today's call. This morning, I will discuss the progress we are making our core origination and default businesses described the terms of our recently announced agreement with Ocwen and provide a brief overview of our first quarter financial performance.

Turning to slide three and our origination business. We are pleased with our first quarter performance and more importantly, with our long term prospects, we generated $16 $8 million and revenue, which represents 68% growth compared to the first quarter of 2020.

This growth reflects sales wins greater market penetration with our existing solutions the rollout of a new employment reseller solution and a strong origination market.

For the full year, we believe we are on track to grow revenue and this business by approximately 40% to 50% compared to 2020 significantly outpacing the nba's forecast for a 14% decline and origination volume.

Growth and our origination business further diversifies, our revenue as almost all of our 2021 and forecasted origination revenue is from customers other than Ocwen, and and RSV and no one customer represents more than 11% of first quarter revenue.

The next couple of slides to provide you with an overview of origination business and business model and growth strategy.

Turning to slide four alpha sources, the manager of the 226 member lenders, one mortgage cooperative and.

As the manager we offer a suite of solutions designed to help the members improve their profitability and compete against larger and better capitalized mortgage companies.

We estimate that the lenders one members collectively originated approximately 16% of residential mortgages and 2020.

Representing approximately $610 billion and origination volume.

So give you a better sense of the member scale. If you aggregate all of the members origination production lenders one would be the largest residential mortgage lender and roughly the same size as the top three lenders combined.

The growth and market share of the lenders one members is impressive.

Upon the typical lenders one members branch office business model and members originated a greater proportion of purchase mortgages and the large nationwide lenders, whose production is more heavily weighted to refi.

As anticipated the purchase mortgage originations will become a greater proportion of total originations and the next several years benefiting lenders one members.

And 2020, we grew revenue and our origination business by 46% and anticipate growing by approximately 40% to 50% and 2021.

We believe that the medium to longer term opportunity for our origination business is massive with a forecasted year end 2021 lenders one membership base, representing a serviceable market of $5 7 billion.

Slide five illustrates our business model as the manager other cooperative our objective is to leverage the collecting the collective buying power of the members to improve their profitability and generate revenue for alpha source, primarily through four revenue streams and <unk>.

And we negotiate better pricing for the members with preferred capital market providers, and vendors and participate and enhanced capital market execution and vendor savings.

Second, we resell certain products, including flood certificates equal.

E closings and verifications at attractive pricing to the members.

Third we established programs to potentially earn performance based equity and certain providers that offer products to the members that attractive pricing.

Finally, alpha sources of direct provider of solutions, including title insurance, and escrow valuation and fulfillment services and vendor oversight technology.

Slide six sets forth our growth strategy for our origination business. We believe there is a massive opportunity to continue to grow by adding more lenders one members and increasing the capture rate of existing solutions launching more solutions and evolving to a higher margin reseller or direct provider for certain solutions.

And <unk>.

We believe that our growth strategy creates a very attractive network effect, we are adding more lenders one members and evolving certain offerings to a reseller of direct provider affords us greater scale and bargaining power and improves the members profitability, which in turn attracts more members.

As an example of the value we bring to the lenders one members last week, we signed an agreement with one of the nation's largest retailers to establish a regional pilot program to lease space added stores to offer loan origination and related services to the retailers customers to our lenders one members.

In addition to providing what we believe will be attractive mortgage leads for the lenders. One members. We anticipate that this program will enhance customer loyalty for the retailer and generate attractive revenue and earnings for Alpha source.

If the 10% to 20 store pilot program is successful the retailer has indicated that it would like to work with us to expand the program nationwide to as many stores for which we have an appetite.

We hope to launch the pilot program by the end of the third quarter.

Turning to slide seven and our default business last week, we entered into an agreement with Ocwen to extend the term of our services agreement from August 2025 to August 30.

Expand the scope of solutions to include the opportunity to provide field services first and second chance foreclosure auctions and title services on Ocwen, FHA, VA and USDA loans and establish a framework to provide foreclosure trustee solutions and additional states.

Ocwen is an important and strategic customer and we are pleased to enter into this agreement.

We also believe that Ocwen <unk> recent capital raise servicing portfolio growth and anticipated launch of its MSR vehicle will provide <unk> with significant opportunity to grow as ocwen gross.

As expected first quarter 2021 revenue and our countercyclical default business was 70% lower than the first quarter of 2020, and 27% lower than last quarter.

According to Black Knight foreclosure starts and active foreclosure inventory, we're at record lows and February is extended foreclosure moratoriums continue to suppress default activity.

At the same time average seriously delinquent loans and the first quarter were four 1% compared to one 2% and the first quarter of 2020.

And.

60% growth compared to the midpoint of our 2021 revenue scenarios.

We anticipate that the default market will stabilize in 2023, when post moratorium foreclosure starts convert to a steady state of foreclosure and Oreo inflows and sales.

With short term demand for our default services constrained due to the pandemic related foreclosure moratoriums and forbearance plans and the expectation that additional restrictions on Servicers may largely prohibits foreclosures to commence until we ended the year, we are leveraging our default offerings to support the single family Investor market.

To support real estate investors, we are developing our signature buyer and signature seller programs to provide a suite of solutions to single family investors.

As you can see on slide nine the single family Investor market is much larger than the foreclosure sale market with an estimated $1 million investment homes sold per year compared to 140000, and foreclosures that became Mario and 2019.

In addition, the participants on the single family market you similar offerings to what we provide and the default space.

These include real estate brokerage online real estate home sales and auctions title and escrow services home and rental valuation and investment home underwriting and acquisition services.

We believe alpha sources, one of the few one stop shop providers of these services on a nationwide basis to address the single family rental market. We are enhancing our hubs <unk> dot com and <unk> dot com websites to better support real estate investors. We are also establishing channel programs intended to drive single family investors to our suite of <unk>.

Services to support the acquisition management and disposition of investment homes, while we are still early and our development of these programs. We believe that could become a significant contributor and provide greater balance to our real estate business over the entire business cycle.

Turning to our first quarter financial performance as you can see on slide 10, we generated $48 $1 million of service revenue and negative $8 5 million of adjusted EBITDA, We performed largely in line with our expectations for the quarter as discussed our origination business performed well with revenue growth of 68 per.

<unk> compared to compared to the same quarter last year.

The default business was impacted by the continuing pandemic and the loss of referrals from certain portfolio sub serviced by Ocwen and the second half of 2020.

To address the extensions the foreclosure moratoriums and forbearance plans, we took additional steps designed to reduce our costs and late February.

As a result of these and other measures and we anticipate that 2021 cash operating costs, excluding outside fees and services should be more than $20 million lower and first quarter annualized costs.

This equates to an average of more than $7 million and lower costs for the remaining three quarters of 2021.

For additional information on our first quarter financial performance. Please refer to the press release and form 10-Q issued earlier this morning.

Yes.

Once delinquent loans begin to move through the normal default lifecycle and.

And finally, our expansion into the single family Investor market allows us to leverage our existing suite of default services and should further diversify our revenue and earnings streams.

Now I'll open up the call for questions operator.

Thank you as a reminder to ask a question you will need to press Star then one on your telephone to withdraw your question. Please press the pound key.

Our first question comes from the line of Mike Grondahl with Northland Capital markets. Your line is open.

Hi, This is Michael on for Mike and Thanks for taking the questions. Maybe just first on the Ocwen deal on.

It seems like a nice sort of solution and expansion overall.

Do you lose any solutions and your state there.

And just overall net positive there.

Yeah, Hey, Mike Good morning.

The agreement with Ocwen and actually we view as a very positive we're adding five years term and we're adding a slew of FHA related services that we werent previously providing to ocwen and <unk>.

Pre pandemic those.

Services were generating I think roughly $2 million a month of service revenue.

Our revenue today, obviously with the pandemic they are down significantly from there we just launched.

Some of these services with Ocwen, a couple of months ago and index anticipate growing those.

<unk> significantly over the next over the coming months.

But basically we've added five years to our term, which certainly increases the present value of other value of our relationship with Ocwen.

Got it and.

And then just since the end of the first quarter last few weeks here.

I think and the news there is a federal judge on the.

Addiction.

Good morning thorium.

And anything new there as far as on that.

And at that and.

But the other businesses.

Sure. So I think there was a DC circuit court.

The rule of the CDC eviction moratorium was unconstitutional.

That ruling did not address the foreclosure moratoriums.

On.

And there are different opinions amongst the circuit courts with respect to the eviction moratoriums and it looks like it's going to go up on appeal and were working at Alta source on on an assumption that the moratoriums and at the end of June but that there'll be other measures put in place by the government that essentially.

Our effectively.

Thanks, Paul I'll hop back into queue.

Great. Thank you.

Thank you. Our next question comes from the line of Shah Mito with Napier Park. Your line is now open.

Hey, Thanks for taking my question.

Can you just talk about how you see liquidity from the remainder of the year, obviously, if things are starting to pick up on that.

It is going into the fourth quarter, but.

Can you just sort of address your and your thoughts around.

On a cash share.

So we ended the quarter with $41 million.

Of cash and we continue to implement.

Cash savings activities and the first quarter and into April of this year and that we believe thats going to considerably reduce our EBITDA loss as the year progresses.

Also in the first quarter typically working capital uses cash and in subsequent quarters that generates cash and we are also anticipating.

A pretty sizable tax refund later this year. So we believe we've got adequate liquidity for the year.

On this call.

Okay.

Yes, hi.

Yes, I would just add to that that we think the impacts from the pandemic is short term. Unfortunately, the pandemic and this and investor of Ocwen that move business away is having an impact on us this year, but we believe there is tremendous pent up demand as we discussed in my prepared remarks, and our default business. We have also extended the runway.

And with Ocwen for an additional five years and are adding additional services that we may provide to.

And to Ocwen and then our origination business continues to grow at a very rapid pace and we also believe that has.

A very long runway and finally as we've talked about and my prepared remarks. We're also beginning to leverage those tools. We have developed for the default space for our signature seller and signature buyer program.

Support real estate investors and we thank all and all of that will provide for longer term growth and a more balanced customer base for alto source.

Okay.

Great.

Thank you.

As a reminder to ask a question you will need to press Star then one on your telephone.

Our next question comes from the line of Raj Sharma with B Riley. Your line is now open.

Hello, Good morning, Thanks for taking my question.

On.

I wanted to can you touch upon the single sample the <unk>.

The rental.

Opportunity how much.

Does that.

Or does that come comprised of your business today and all.

Also and what is what is different.

And how you're approaching it but also how those.

The marketplace and the equal services, so that differs from the.

The rest of the businesses.

On the single great great.

Raj Thanks for your question.

Okay.

<unk>.

And the real estate Investor space, where today, we are developing two programs. One is called the signature buyer program and the second is called the signature seller program.

And the signature buyer program.

We have a couple of channels to drive business to that suite of services that we provide and the default space title valuation online auction and brokerage et cetera, and so.

One is there are those.

Investors that have crypto currency, we've created a relationship with a company where they'll convert that crypto currency the Fiat and so we can help crypto investors buy homes by investment homes using our suite of services. So that's one channel and a second channel as we're talking with retail investment advisers, who have.

<unk> that are looking to diversify their revenue stream.

Away from just the for example, the stock market and view real estate as another opportunity.

And the private markets to make investments so we're working to establish.

Those channel relationships with retail investment advisors to help their customers buy manage and ultimately sell investment homes and then of course, we're leveraging leads on our website both on <unk> dot com and on equator Dot com, where we've deployed youre starting to see some of these improvements to the site, where we've deployed some tool.

On the signature seller side, what we're doing Raj is helping investors primarily investors sell their rental homes on both hubs and dot com and equator, and I think and the first quarter just to give you a sense of some of the progress we made and we really just getting going we signed 26 signature sell.

Agreements don't hold me to the exact number but I think we generated about 55.

$60000 of revenue and April representing people investors that are selling their homes on hub zone and so we're looking to significantly expand that program as well and then just to give you to answer your question about.

Why the pivot here if you think about we were more on the rental space through our relationship with frankly ARD residential and then we sold back our property management business to them a couple of years ago, and then ultimately they sold their business and are now private and so we're now at a point, where we're saying look we should revisit these suite of <unk>.

Services, because it's leveraging.

Almost the exact same set of services that we're providing to loan servicers and other investors on the default side. We can now pivot and also provide those services on the investor side, while while and particularly those default market has slowed down as much as it has so we view this as a as a as a medium to longer term opportunity, we're making good.

<unk>, obviously, we're still in the early innings.

Got it.

Got it and then on the off line extension.

You mentioned that.

Settlement of all.

And.

Issues with.

And with part of the business.

And this is this is for US ahead of schedule.

Can you give some color around that and this is take care of.

Yours.

And the.

I guess the issue that you had with NRG.

And so this is an agreement between <unk> and Ocwen.

We had a disagreement as to whether or not the ocwen and <unk>.

<unk> had the ability to move services that were covered what we believe were covered by our agreement to health and source to Nrg's captive vendor. So this was this settles that disagreement.

By extending the term of our agreement for five years. So from August 25 to now August 32030, and we've also added FHA services and we've now started I think we're getting.

10, or roughly 20% of Ocwen volume 10, or 20% of Ocwen volume and I think we're at 20% beginning in April of their FHA field services work and for new foreclosures their auction work, but keep in mind with the pandemic. The volumes are significantly lower than what they would normally be and then we're working with <unk>.

And in a very.

Thoughtful manner to continue to expand the scope and services, we're providing to them on FHA up to at least 90% of Ocwen is volume and then we also have the opportunity, which we have not started yet to add an additional five states where we do.

Foreclosure trustee work for.

And for Ocwen and then there's also some opportunities around <unk>.

The reverse mortgage portfolio, which we haven't started yet.

Great Great. That's it thank you I'll get back and alright. Thanks.

Thanks Raj.

Thank you.

To ask a question.

Please press Star then one on your telephone.

There are no further questions I will now turn the call back to Ms. Chen for closing remarks.

Great. Thank you operator, and thank you for joining other call. We appreciate your support and interest and Alto source. Thanks.

Ladies and gentlemen, this concludes today's conference call. We thank you for your participation you may now disconnect.

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